Contact: Scott Denne
OpenText comes off its M&A holiday with the $330m acquisition of business intelligence and analytics vendor Actuate. This is OpenText’s first deal since just over a year ago, when it inked its largest purchase – the $1.2bn GXS buy.
Its reach for Actuate shows that OpenText still has the same M.O. despite its longest break in dealmaking since 2007. The enterprise information management provider values the target at 2.5x trailing revenue, in line with both the GXS valuation and the median valuation of its disclosed and estimated acquisitions over the past four years, according to The 451 M&A KnowledgeBase.
With this transaction, OpenText rescues Actuate from a punishing period in its 16 years as a publicly traded company. Over the past year (but before the deal announcement), Wall Street sent Actuate’s stock tumbling down by half, in response to the lower-than-expected profits posted during its transition to a SaaS model. While Wall Street may not have been impressed with Actuate’s transition to SaaS, OpenText was. SaaS revenue accounts for the lion’s share of OpenText’s recent growth and its last two big transactions – GXS and the $246m pickup of EasyLink Services in mid-2012 – were both done, in part, to bolster that segment of its business.
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